At the close of the 2015 session, here is a scorecard for Tax Fairness
Advances toward Fairness:
HB 2652, our bill to keep Hillsboro from offering a tax break designed for rural counties, while keeping almost all the benefits for itself—the Rural SIP (Strategic Investment Plan) Bill —signed by Gov. Brown in June.
HB 2075, the bill that increases Oregon’s ridiculously low aviation fuel tax from 1 to 3 cents a gallon, will bring in $5.25 million this biennium. It means airport users will do more to support airports, which saves tax money in the general fund. Truck and car drivers are paying 30 cents a gallon to support roads. Three cents a gallon isn’t enough to make airports self-supporting, but the bill requires another look at the issue in 2019, when maybe we’ll succeed in getting airports to be self-sufficient in Oregon as they are in Colorado. (Also, in Oregon most of the smaller, gasoline-powered aircraft are still using leaded gas—for health reasons, that has to change.)
Like the aviation fuel tax, Gain Share isn’t as fixed as we would like, but it’s a whole lot better! Changes mean the legislature had an extra $53.5 million to spend this biennium, and Washington County/Hillsboro will be limited to receiving no more than $16 million a year of the income taxes paid by employees working at SIP facilities. When Gain Share was approved in 2007, it was predicted to cost about $5 million; in fact the 2015-17 cost would have been $85 million, almost all going to Washington County and Hillsboro. As we’ve said elsewhere, in the long run it’s $21 million more expensive than just letting current law sunset in January of 2019, but holding out will take guts and listening to the whining of Washington County/Hillsboro officials in 2016, 2017, 2018 and 2019.
SB 658 died a quick death after one hearing. It would have given a property tax break to a number of wealthy folks living on estate properties off Skyline Blvd. in Portland. In what’s become a typical move, when Oregon’s tax court says something is against the law, owners appear at the capitol, usually after making sizeable election donations, and ask legislators to fix the law to favor themselves. This time it didn’t work. Our job was made simple—we just needed to give legislators copies of the Willamette Week expose: “You call this a farm? Urban farmers and foresters benefit from a gaping property tax loophole.”
Other bills we fought which died:
SB 760 – a farmers’ bill that would have made “donating” food more profitable than selling it
HB 2449 – a biomass bill that would have subsidized this industry even further
HB 2752 – a Research and Development bill that would double corporations’ tax break, bringing it to as much as $2 million a year per business!
HB 2072 – the film industry’s ask to double their subsidy to $20 million a year.
Oregon Transportation Commission (OTC) of the Department of Transportation (DOT) was Chaired by Catherine M. Mater, who stated that she discovered a fraudulent application for a grant under the ConnectOregon program of the DOT. The application requested a berth improvement project at the Port of St. Helens which would assist the Australian Amber Energy company in transporting coal by train and ship through Oregon. Mater voted, along with two other members of the five-member Commission, to disqualify the application. Though she was soon fired by then-Governor Kitzhaber, TFO testified in support of her action, which was upheld, saving taxpayers $2 million. ConnectOregon advocates and the Governor’s budget asked for $58 million overall for this grant program that provides most of the money for public and private projects at ports, airports, and rail yards as well as for public transit and bike/ped paths.We worked with success to keep the cost down; funding increased only from $42 to $45 million.
Setbacks from Fairness:
SB 611, is known as “the Comcast bill,” partly because Comcast gave $222,000 in campaign contributions and that got the conversation started early—the second week of the legislative session. TFO helped tighten and limit the bill, but we consider it to be terrible tax policy. The bill provides somewhere between $10 million and $35 million in property tax breaks for giant communication companies—from Comcast to Google, including Amazon and Microsoft.
HB 3125 is another giveaway to business, exempting from property taxes food processing equipment for grain, eggs and dairy—really, do we need to subsidize the country’s cheddar cheese and French fries? Evidently yes.
Hopes for Future Fairness:
HB 2289A: $20 million Brownfield property tax abatement. Only TFO spoke against this giveaway to property owners. The bill died but the issue does need to be addressed, just in a better way.
The sale of energy tax credits continues. Energy project owners are still selling their credits to wealthy investors who then get huge profits. For example, Dan Wieden, of Wieden + Kennedy advertising agency, paid 75 cents on the dollar for $1.8 million in state income tax credits from TriMet, saving $450,000 on his taxes, Willamette Week found. TriMet got 70 cents on the dollar; the deal facilitator got 5 cents on the dollar ($67,500 for one deal–that’s rich). There was a 2011 legislative effort to stop this practice, which obviously didn’t work. Unfortunately, the article brought the problem to light too late for action. Next session we’ll be working for a fix. One obvious solution is to provide grants, and they could appropriately be for 70% of the current tax credits.
Why the continuing appetite to pass more tax breaks for business?
A quick scan of the tax legislation passed in the 2015 session reveals at least eight bills that give tax breaks to business. That must mean the Oregon industry is in trouble: normally, you give a tax break to subsidize something that wouldn’t otherwise occur. Except that is decidedly not the case. In fact Oregon’s business and industry are growing by leaps and bounds under the existing tax structure. We’re leading the country in growth rate.
Let’s start by looking at the new subsidy for commercial scale solar arrays—arrays of .4 megawatts or more.
Commercial scale solar arrays started popping up in Oregon in 2008. There are at least 15 operating today, and 13 more on the drawing board, yet legislators passed a bill that will cut the taxes of commercial scale solar farms. For example, the taxes of a 5MW solar farm would drop from $226,000 to $35,000 in the first year. While the $226,000 figure would go down each year as the facility depreciates, the $35,000 figure will remain constant for 20 years. However, since 20 x $35,000 = $700,000, roughly what the owner would have paid in the first three years, clearly the business gets a huge property tax break—35% is the business owner’s estimate.
Tax Fairness Conclusion
It takes a lot of persistence and fortitude to “read the bills and follow the money” through an Oregon legislative session. We at TFO know that as constituents and citizen advocates, we must keep pace with—and even anticipate—the evasive schemes of those elected officials who intend to sweeten corporate profits with taxpayer dollars. And always we must keep growing our base of support. Accordingly, this month we are holding a TFO Retreat to choose the focus of our upcoming work to support and/or defeat specific tax and spending ideas, and to find ways to make it easier for potential advocates to get up to speed on existing taxes and on how to influence their legislators. We will be getting back to you with some fresh ideas.
Thanks for your support—The TFO team: Jody, David, Pat, Steve, Elsa, Juergen and Sally